FCC Approves Discount Plan for Schools

The Federal Communications Commission
voted unanimously last week to give deep discounts on the purchase of
telecommunications services to most schools and public libraries,
lowering a major hurdle between schools and the information age.

"This is one of the top five education actions by the federal
government in our nation's history," said Gordon M. Ambach, the
executive director of the Council of Chief State School Officers, in a
reaction that typified the enthusiasm for the move expressed by many
education groups.

The cost break for educational institutions, known as the "E-rate,"
will be available beginning Jan. 1 and could save schools and libraries
up to $9 billion over four years.

The FCC order, which implements the "universal service" provision of
the Telecommunications Act of 1996, also guarantees that people in
low-income and high-cost areas will continue to have affordable phone
service.

Just before the vote, Reed E. Hundt, the commission's chairman, said
the discounts were needed to provide opportunity and equality for all
Americans and to further advance the nation's growing information-based
economy.

The new rule sticks closely to the recommendations issued last
November by the Federal-State Joint Board on Universal Service, an FCC
advisory group.

Schools in places with high telecommunications costs or high poverty
rates will receive the greatest discounts--as much as 90 percent.

But all public, private, and parochial schools--as long as they are
nonprofit and do not have endowments of more than $50 million--will
benefit.

The wealthiest schools will get discounts of 20 percent. Federal
officials estimate that the typical school will receive a 60 percent
discount.

The discounts cover all telecommunications services, including
telephone calls, wireless services, Internet access, and the
installation and ongoing costs of internal connections within a
building. Computers, software, and training are not covered.

Universal-Service Fund

The companies that provide the eligible services will be compensated
from a universal-service fund created by fees paid by all
telecommunications providers.

The fees will be assessed only as schools and libraries require the
services.

Internet-service providers do not have to pay into the fund, a fact
that has dismayed the telephone companies.

The fund has a cap of $2.25 billion for schools and libraries for
every calendar year.

But up to half of any unused amount will be carried over to increase
the cap for the following year.

For the first six months of 1998, the fund is capped at $1
billion.

Schools must apply to the fund administrator for discounts for
specific services.

Then schools will pay the discounted rate, and the service provider
will be reimbursed from the fund.

Any company, from a telephone giant to a small-town electrician,
will be eligible to provide Internet access and internal connections
within schools and libraries and be reimbursed from the fund.

Related Rules

The federal agency also gave unanimous approval last week to two
related regulations that make far-reaching changes in the rate
structure for telecommunications services.

The rate changes are designed, among other purposes, to provide the
wherewithal for phone companies to pay into the universal-service fund
without raising charges for basic phone service.

The complex rules reduce the access fees that long-distance
telephone companies pay to local phone companies to connect telephone
calls.

They also permit local companies to make limited increases in phone
charges for additional residential phone lines and multiple
business-phone lines.

At a press conference after the FCC's decision, jubilant leaders of
education and library groups and their supporters in Congress and the
Clinton administration hailed it as a historic social policy. Several
said it was on a par with the GI Bill, the law that since the 1940s has
given education aid to veterans.

An Electric Moment

Vice President Al Gore, one of the first national leaders to
champion schools' access to advanced telecommunications, compared the
decision to the introduction of electricity in schools in the 19th
century.

But educators have also cautioned that some schools will have
trouble paying for telecommunications services even at the maximum
discount.

Costly investments in computers, software, and teacher training also
will be needed to use technology effectively.

Secretary of Education Richard W. Riley relished the moment, then
emphasized the task yet to come.

"We have a great responsibility," he said. "Most of all, we must
show that it really makes a difference in the classroom."

Additional concerns about the decision were voiced by companies that
provide local telephone service.

Marvin Bailey, the director of federal relations and educational
policy for the Chicago-based Ameritech Corp., said he supported
discounts for schools, but he questioned the "recovery mechanism" for
the universal-service fund.

Mr. Bailey said the regional Bell telephone companies oppose giving
schools discounts for internal connections and Internet access because
they believe those are outside the scope of the Telecommunications
Act.

The regional Bell companies estimate that those services will make
up about 60 percent of overall spending from the universal-service
fund.

If school discounts for internal connections and Internet access
were excluded, the fund would require only $1 billion annually from the
various telecommunications providers, Mr. Bailey said.

If the companies decide to sue to block the rules, a court could put
the E-rate on hold pending the outcome of such a suit.

Learn the Facts About:
Learnet. A primer from the Federal Communications Commission on the
FCC's proceedings that affect education. It explains how the
Telecommunications Act of 1996 will help schools and libraries obtain
access to state-of-the-art services and technologies. Also includes
information on other FCC proceedings that could affect education.